Kyle Samani: Why Bitcoin is Not a Hedge Against Inflation | 20VC #909

1. 0:00 – 4:18

   Journey to founding Multicoin Capital

   1. KSKyle Samani0:00

      (reversing beeps) Three, two, one, zero. You have now arrived at your destination.

   2. HSHarry Stebbings0:08

      Kyle, this is such a joy to do. I'm so excited for this episode and education that it will be for me. So thank you so much for joining me today.

   3. KSKyle Samani0:17

      Hey, pleasure to be on the show. Thank you for having me.

   4. HSHarry Stebbings0:20

      Listen, the pleasure's all mine. But I want to start with a little bit on you before we dive into the nitty-gritty. How did you make your way into the world of crypto and investing, and how did Multicoin come to be? Let's start there.

   5. KSKyle Samani0:31

      Sure. So I did my last startup, uh, in 2013. It was called Pristine. We built software for Google Glass for surgeons. I know Glass was kind of a silly consumer product, but it was a very interesting tool for surgeons because they work with their hands and are sterile and gloved up. Um, did that raised venture, grew to a few million in revenue, got to, hmm, 25, maybe 30 employees, and then Google killed Google Glass, uh, which was a problem for the business, as you would imagine.

   6. HSHarry Stebbings0:59

      (laughs)

   7. KSKyle Samani1:01

      Uh, so after that happened, I pivoted the company and, and the company was ultimately acquired for kind of scraps, so no one really made any money. Um, in 2016, I had to kind of find something new to do with myself. Um, I was pretty jaded with healthcare at this point. Um, and, uh, you know, tried to find something new. I discovered Ethereum in March or so of 2016, n- um, and, uh, started fiddling around with it. And, uh, it struck me f- fairly quickly that this is what permissionless finance is. Um, I had played around with Stripe's APIs maybe a week or two prior, and, uh, I was quite frankly not terribly impressed. I was like, "You can take a credit card payment? Like, why is this the most hyped up company in the world?" Um, but with Ethereum, I started fiddling around with it and I was like, "Oh, I can do stocks, bonds, equities. You know, I can m- make things trade." And once I kind of understood the flexibility, um, of, of all the things you could do with it, y- in one fairly simple language, that's when my eyes kind of opened to what, um, the power of smart contracts could be. Uh, over the course of 2016, kind of spent an increasing percentage of my time reading and learning about the space, falling down the proverbi- f- proverbial rabbit hole. Um, by the spring of 2017, I had, uh, basically at this point I was 40 hours a week, internet hobby, crypto. Um, and, you know, I called up Tushar in May of 2017 and I said, "Hey, man, we should, we should do a fund. Like, we can... I think this is... timing is right." Uh, actually, the, the Gnosis ICO was the, was the day that I was like, "Okay, we gotta go." And, uh, Tushar, uh, was working on his prior startup a- also in the healthcare space, and, uh, he was like, he was getting pretty excited about crypto as well. We'd been kind of going down the rabbit hole together. Um, and so in May of '17, we agreed to launch Multicoin. Uh, s- we had no idea how to launch a fund. Took us a few months to figure that out, um, but got our, got our liquid fund up, up and off the ground on October 1st of 2017. Uh, we added our first venture fund in July of '18, and, uh, yeah, we're now on our third venture fund an- and off to the races.

   8. HSHarry Stebbings3:05

      And what an incredible journey it's been. I, I often find that you actually learn a lot from the hard times. Um, I... one question that I love, um, is what lesson in the Multicoin journey was the most painful to learn that you're also pleased to have been through?

   9. KSKyle Samani3:24

      Um, we cannot be the best at everything. Um, we tried to for our first 36 months, 24 to 36 months, uh, trade the market and do fundamental research and do venture, and we realized you cannot... you just cannot do all of the above. And so, um, you know, we, we scrapped the trading the market, and I no longer look at the prices of anything. Um, we now are 100% focused on thesis formation with our... our holding period is indefinite. Um, it was a very painful lesson. We made a few trading mistakes that were, were very, very, very bad. (laughs) Uh, fortunately, they were not lethal and, uh, we survived and now know what, what is our strike zone.

   10. HSHarry Stebbings4:14

       Before we dive into, you know, the, the deeper granular... f- f- final

2. 4:18 – 5:28

   What does high performance mean to you?

   1. HSHarry Stebbings4:18

      one before we do that. What does high performance mean to you when I ask you that?

   2. KSKyle Samani4:22

      In the context of investing, um, I, I think there's a kind of a few levels to it. One is building the right culture and organization so that everyone on the team has the right frame and the... to execute. Um, and then I think the other part of that is your own cognitive performance, and I think that's primarily a function of health behaviors. Um, and, you know, making sure your sleep is there, your diet, your exercise, um, supplements, meds, whatever you're gonna do, but being very eyes-wide-open that your brain is a muscle and that you are training your brain and that you want to be having your brain perform at peak performance at all times.

   3. HSHarry Stebbings5:04

      Now, I, I always find, you know, 10 mojitos always makes that slightly challenging. But, uh, I persist anyway. (laughs) Uh, I, I, I do wanna dive in though, and you know, when we chatted before, you said to me that tokens are a mechanism to bootstrap network effects, but also to reduce the power of network effects. And I thought that sounded incredibly wise and intellectual. But I wanted to take it a step back and actually kind of ask, and forgive me for the base

3. 5:28 – 6:58

   What are tokens?

   1. HSHarry Stebbings5:28

      question here, what actually are tokens? How do they differ from equity, and how do you value them? And I know I sound stupid, but I find it helpful to ask the (laughs) stupid questions.

   2. KSKyle Samani5:39

      Tokens are assets. Um, assets can be priced, they can be valued. Some assets can have a DCF, some cannot. Gold, for example, famously does not have a DCF. It's just a function of supply and demand. Um, uh, tokens are assets. Um, you would hope that in the long run tokens have some sort of discounted cash flow model that can be used to justify their value. Um-... that may or not be required in the future. Uh, I mean, it may be required for some types of crypto assets, it may not be required for others. Um, those questions are still open. Uh, but at the end of the day, they're assets. Um, we spend most of our energy today focused on assets that we believe will be able to produce, um, some sort of discounted cash flow model in the future. Um, however, the- the thing that's confusing about the crypto landscape in particular is that the largest assets, uh, by market cap, notably Bitcoin, Ethereum, Solana, et cetera, uh, are assets that don't really have an obvious DCF. Um, and- and so you... The- the... I- I think that kind of is the source of confusion for many people. As you go down CoinGecko, um, you know, you get kind of past the L1 platform tokens, um, most of the remaining assets, theoretically, you should be able to produce a DCF for.

4. 6:58 – 9:31

   Tokens vs Equity investment

   1. KSKyle Samani6:58

   2. HSHarry Stebbings6:58

      I've had situations in the past where I'm offered five million in equity and five million in tokens, and I- I need to take the token investment to get the equity investment. And I'm never really sure, like, how to think about that. Bluntly, I'm a traditional, really enterprise SaaS investor, and I'm looking at it going, "Okay. What does that mean?" Like, h- how should one think about that when you're having to buy tokens alongside equity to make the equity investment? Sorry, I'm- I'm using this purely for my own knowledge here.

   3. KSKyle Samani7:30

      Yeah. Um, in almost all cases, there should not be value accrual to tokens and equity. There are a couple of exceptions to that, um, but as a general rule, that is true. Um, for teams that try and pitch you value accrual to both, it is almost certain that those two things are in conflict and that will create a lot of serious problems down the line.

   4. HSHarry Stebbings7:54

      How are they, how are, how are they in conflict? 'Cause I thought you had, like, utility tokens which people could use and it made networks better, in which case the- the value of the token would go up and then surely the value of the equity would go up because people use the tokens more and so they're aligned, no?

   5. KSKyle Samani8:10

      Uh, yeah, there's a lot of... The- the same way that, like, prefer- you know, on a capital stack gives series A, B, C, D in common, you could have diverging interests. Um, very easy to have one part of the, in this case call it the capital stack, so to speak, accrue value at the expense of the other. Um, that is a frequent, uh, proposal we see that founders put forth and we, um, al- always reject it.

   6. HSHarry Stebbings8:34

      So you want to buy equity or you want to buy tokens?

   7. KSKyle Samani8:38

      We generally are token investors. Um, mechanically speaking, with a lot of the private round market deals that get done these days, uh, they're legally structured as- as, uh, SAFs... Excuse me, as SAFEs with token warrants or equity rounds with token warrants. But the primary asset that we believe will have value is tokens and we- we do not believe the equity will be worth anything.

   8. HSHarry Stebbings9:01

      Speaking to, like, why you have tokens, just, uh, just to help me understand, why would w- it make sense for one company to have a token and one company to not have a token? 'Cause I see a lot of companies with tokens and I'm like, "I don't get the utility value of this, actually, and why you're doing it at all."

   9. KSKyle Samani9:18

      Um, tokens only make sense if you need to incentivize behavior in a permissionless fashion among the public at large.

   10. HSHarry Stebbings9:27

       Okay. So it's-

   11. KSKyle Samani9:27

       Um, to have them all coordinate on- on some sort of broader shared objective.

5. 9:31 – 15:32

   Helium protocol and how tokens can bootstrap network effects

   1. KSKyle Samani9:31

   2. HSHarry Stebbings9:31

      So if we tie that into your bootstrapping of network effects, how do tokens actually bootstrap network effects?

   3. KSKyle Samani9:37

      Yeah, so the b- the best way to reason about this is just to look at- at what I think is the best example of this, which is the Helium network. So the Helium network today is, uh, I think maybe n- eight or 900,000 hotspots. Um, and the Helium network is a... The Helium protocol is a new business model for deploying and managing your wireless network. So if you think today about how Verizon or AT- Verizon or AT&T or, uh, Orange or Vodafone or whatever, um, how do they build a network? They look at, you know, who has what... They look at the map of the city, they figure out where the optimal places are to put the towers, they call the people who own land, they go build the land. They, excuse me, they go... They rent the land, they go build a bunch of towers, they run a bunch of backhaul. Um, it's a very capitally intensive top-down process to do so. Um, there might be some subcontractors involved here, companies like American Tower, but again, those guys are incurring all of those costs. Um, and, uh, obviously it's extremely expensive to get that network off the ground. Uh, in the Helium network, the idea is, uh, hey, you have, you can buy a hotspot, put it in your- next to your window, uh, has an antenna on the back, it creates radio waves. Um, and any device walking around nearby that wants to access those radio waves pays you per byte of data, um, for providing that connectivity. Um, and- and the goal of this model is, or what's great about this model is, you physically remove 99% of the cost from the system. So labor cost goes to zero, land cost goes to zero, backhaul cost goes to zero. Um, you- you just physically remove, like, all of the cost basically. The only cost that remains is obviously the cost of the hardware itself.

   4. HSHarry Stebbings11:09

      Mm-hmm.

   5. KSKyle Samani11:09

      Um, which at this point is fairly commoditized. Um, and- and so the... So with Helium, the goal is you, to build a wireless network. Now, the thing with a wireless network is, a wireless network with 10 hotspots is usel-... Like, it's not worth, it's not worth one-one millionth of Verizon's network. It's actually worth zero because no buyer wants to bother to engage with a network that only has 10 hotspots.

   6. HSHarry Stebbings11:34

      Sure.

   7. KSKyle Samani11:34

      Like, it's not worth their energy or effort to think about. Um, so there are some minimum critical mass required before which the network has any value at all, right? And, yeah, and, like, I don't... It's unclear what that threshold is, maybe it's 100,000 hotspots, maybe it's 500,000 hotspots, like whatever, but there's some non-zero number. Um, and so the beauty of- of- of token, of- of- of tokens here is, um, if- if you can tie the usage of the network to organic demand for the token, in the case of Helium, if you want to use the network, you have to buy tokens and then burn them, um, to use the network, um-... then, then if you believe in the vision of the Helium network, let's say you're the first guy or the first one, one of the first hundred guys to buy a hotspot, you are taking on more risk than the guy who buys the 200,000th hotspot, right? Because it's just much less clear that you will get to critical mass. Um, and so you actually want to incentivize those people to, to have more financial upside for taking on more financial risk. Um, and the way that the Helium network accomplished that was they issued a fixed amount of HNT per unit of time. And so the, the first 24 hours, whatever, 100 tokens were issued, the second 24 hours, 100 tokens were issued. If there was only one hotspot in the first 24 hours, you got all 100 tokens. Obviously, as the number of, of hotspots continued to grow, um, the tokens per hotspot per day decreased, right? There's some algorithm on, on how that's determined. But this therefore gives a higher, uh, financial upside incentive to be, to take on the most risk and build out the earliest hotspots before anyone else believes in it. Um, this is, I think, like, the, the textbook example of using token incentives to bootstrap a network, um, where you actually are both able to assign risk and reward and couple those things in, in a real meaningful way, and in which the, the participants in the network, in this case, um, the people who buy the hotspots, are actually creating economic value by physically building a new network, right? Um, and competing with Verizon and AT&T. Um, and, and this is, like, I think, like, a real breakthrough in, in capital formation, um, and just wasn't possible before until you had token incentives.

   8. HSHarry Stebbings13:46

      So given that, why does it then actually also reduce the power of network effects? Talk to me about that kind of flip side.

   9. KSKyle Samani13:53

      By, by making it easier to bootstrap any given network, then for a network that has theoretical network effects, it is also theoretically easier for the next guy to use the same mechanism to bootstrap a competitive network.

   10. HSHarry Stebbings14:06

       Sure. But actually, the lock-in is still the same. I mean, if I was suddenly to create a Helium Two, it would be immensely challenging to disentangle the network effect that's been created by the incentive structure that people hold with the tokens and by the commitment to the hardware that they have. Doesn't it feel a little less?

   11. KSKyle Samani14:26

       Uh, uh, uh, yeah, I don't think that's true. I, I think you're gonna see in a lot of networks, um, the desire to make 100X on your, on your money or whatever, um, for doing real work and helping contribute to a real new network will drive a lot of people to try the new thing, uh, just for the sake of trying it. Um, one, one thing I've, I've discovered is there's a lot more demand for, for venture scale retu- or I should say venture skew of returns among retail than you would previously think, um, if you don't have to have a 10-year illiquidity cycle. If you can believe, "I'll do this thing, I'll put some dollars into this, I'll spend energy and effort, I will actually contribute to some greater good, and I have some chance of making 100X in 12 to 24 months," a huge amount of people will partake in that. Um, and this just wasn't an economically viable outcome before. Um, and I think you'll just see radically changing consumer behaviors as the understanding and recognition of that becomes

6. 15:32 – 16:47

   Does crypto concentrate or distribute wealth?

   1. KSKyle Samani15:32

      normalized.

   2. HSHarry Stebbings15:33

      With new technologies, you often see actually the opposite of what people expect, which is a concentration in wealth, a reduction in, uh, wealth distribution. Um, d- do you think tokens do more to concentrate wealth actually, as we've seen probably in the preceding two to three years? Or do they do more to distribute wealth in a way that I think people envision and hope it does?

   3. KSKyle Samani15:57

      Uh, to- without question, tokens help, uh, distribute wealth. Um, I mean, if you look at, like, tech startups today, like, you know, it's like VCs and employees are the only people with equity basically. Um, and there are a lot of businesses that, like, it would have made a lot of sense and could have been quite value-accretive to those businesses to somehow incentivize or reward either customers or suppliers or whatever with equity in some sort of more meaningful way. Um, businesses do not live in a, uh, s- I, like, right? Businesses have, uh, suppliers and customers and partners and whatever. The fact that norms today around business are those parties typically have no equity ownership, um, I, I think will be looked upon- I think in 20 years will be looked back as a bug of, a bug of capital markets regulation,

7. 16:47 – 18:32

   Biggest challenges for distributing tokens?

   1. KSKyle Samani16:47

      not as a feature.

   2. HSHarry Stebbings16:48

      What are the biggest challenges that companies issuing tokens have in the early days of token issuance? Are there commonalities?

   3. KSKyle Samani16:56

      Yeah, I mean, issuing a token is... Uh, it creates a lot of operational complexity internally. Um, it creates obviously the risk of employees, you know, trading on, on insider information, and there aren't great tools to, to stop and prevent that from happening.

   4. HSHarry Stebbings17:14

      (sniffs) .

   5. KSKyle Samani17:14

      Um, so that, that's a real problem. Um, and then, and then just, like, engaging the community at large. Like, a startup with 12 employees and they issue a token, and now there's 4,000 random retail people who genuinely believe in what you do and are excited about it and want to help. Like, they're banging on your door, and they were like, "How do I get involved? I don't, I can't be an employee. I have a, I have a job. I'm not gonna quit my job, but I want to support you and help you." When 4,000 people call you, like, what do you do? Um, and it's, it's a very different way to think about, um, growing and creating value and engaging, you know, resources around the world. Um, so, like, or like there's the old adage in Silicon Valley of like, "If you want advice, ask someone to invest. If you want advice, if you want someone to invest, ask for advice," kind of a thing, right? Like, I, I think that same kind of general thing maps here of, like, all these people want, o- only want to help you because they believe in it enough to put their own capital at work.... but once they put their capital at work, they then are really, genuinely, they want to help. Um, and, uh, again, I think that, that, that, uh, is, is a very deeply misunderstood and misconfigured function of, of existing capital markets

8. 18:32 – 20:10

   Liquidity within tokens - a blessing or a curse?

   1. KSKyle Samani18:32

      regulation.

   2. HSHarry Stebbings18:34

      When I, when I spoke to Avichal, he said in particular, uh, from Electric, when it came to tokens, the liquidity associated is both a joy and a curse. How do you think about liquidity within tokens? You know, I'm used to traditional venture where you know it, I know it, you're locked up, you have no liquidity. You, you can buy and sell whenever you want. How does that change your investor psychology, Kyle?

   3. KSKyle Samani18:58

      Uh, it doesn't, um, for us. Uh, and the reason it doesn't is, uh, we, we have a r- we have some basic, um, thresholds for making investments, and one of those thresholds is, we will only make an investment if our intended hold horizon at the time of investment is forever. That doesn't mean we, we can't sell it later, but the, the, the thesis has to be good enough that we plan to hold it 10 years from now, um, given current information. Um, and so, in that light, like, it doesn't matter at all in terms of our psychology. I think the big benefit it brings is a much earl- uh, faster time cycle of, are we good at our jobs or not? Um, you know, most folks who are four to five years into their venture career, um, pre-crypto had no ability to, to achieve the, uh...

   4. HSHarry Stebbings19:56

      The feedback loop.

   5. KSKyle Samani19:56

      ... returns, the returns, yeah, the feedback cycles are much shorter. And so we, we ve- we are fortunate, you know, at the GP level to benefit from that. Um, but that does not make, that does not change how we make the investment decisions on the margin.

   6. HSHarry Stebbings20:09

      I, I, I'm

9. 20:10 – 21:07

   How do you maintain a calm investor psychology?

   1. HSHarry Stebbings20:10

      sorry, I, again, I'm just naive. When you look at, like, markets d- d- you know, that are volatile, and you see portfolios down 50, 60, 70%, does that impact your investor psychology, Kyle? Do you lose con-

   2. KSKyle Samani20:23

      No.

   3. HSHarry Stebbings20:24

      H- how, sorry, I'm, it's such a foreign world to me. How do you maintain such a cool head in spite of real-time volatility that is inherent within these markets?

   4. KSKyle Samani20:36

      Uh, I have a joke I share with our investment team frequently. Prices don't matter if you don't look at them.

   5. HSHarry Stebbings20:41

      (laughs) I, I, I agree. Um, it's just challenging to, to not look. You mentioned your team there. I'm, I'm fascinated when we think about, you know, to- token purchasing and token buying, and then we look at every generalist fund today hiring a Web3 partner. Love it. Um, it takes a fundamentally different structure to really win at this game, in my mind

10. 21:07 – 25:01

    How do you structure your firm?

    1. HSHarry Stebbings21:07

       and as Avichal said on the show. How do you structure your firm, and is it structured fundamentally differently to traditional venture firms?

    2. KSKyle Samani21:15

       Well, I've never worked at a traditional venture firm, so, uh, I can't comment too much on other firms. I mean, I obviously interact with both a- analyst associates and GPs at other firms, and I get, I hear kind of rumblings and such. But, you know, never worked at one. Um, the way we structure things, uh, few comments I'll make about how we operate. One, uh, very, very, very f- heavy focus on writing. Um, investment memos are the first part, once, you know, we, we, we are talking about a new asset, um, in an investment committee, the n- the subsequent six or seven minutes are silent. Um, it's d- everyone having a bunch of Google Doc comment conversations concurrently. Um, and, uh, those are not pleasant conversations typically. Um, it, kind of the point is to identify every logical fallacy, every hole, every step skipped, every wrong assumption, and call it out as explicitly as possible, um, and to do that in a, in a very, very systematic way. Um, I mean, we ask questions too, if there's, like, a, a valid question to be asked, um, but it, it's a fairly non-friendly process. Um, and that, that's very asynchronous, and so most of our investment memos have, you know, f- 100 comments running along the side of them. Um, and then, uh, you know, the actual discussion process, uh, from there is, uh, I would guess m- if an outsider were to watch us debate what we debate at IC, they would find that we get way too far into the details on things that appear to not matter. Um, we... I, I, I find it's very helpful to rip apart a subject from every angle and get into every nuanced detail, no matter how small, um, and validate m- my assumption around it. Um, when new people join our investment committee, they are typically flabbergasted at this process. Um, uh, it is not fun, also. It i- it is extremely not fun, um, to, like, you write down something that you think is fairly benign, and then I just come and rip it apart. Um, it, it... and, uh, but I think that's what it takes to find the truth. Uh, I think, I think the process of, of actually recognizing the truth fundamentally requires active disagreement, um, because the human brain is subject to everyone has their own biases and, and whatever heuristics they're using, and they're, as they write a memo are, some of which are inherently misused. Um, a- and so the only way to actually get to the truth is very, very, very active disagreement.

    3. HSHarry Stebbings23:51

       Does it need to be that brutal, Kyle? I, I'm not one-

    4. KSKyle Samani23:55

       Yes.

    5. HSHarry Stebbings23:55

       It does? Why? Why can you not champion and challenge and challenge in a productive and... Well, I'm not saying it's not productive, but challenge in a less fierce way?

    6. KSKyle Samani24:07

       I mean, it's not rude. It's just, like, you made this statement, and I will just say, "This statement is not correct. This assumption is false."

    7. HSHarry Stebbings24:16

       Okay.

    8. KSKyle Samani24:17

       Like, what, I don't know what the... Like... And I, and I believe in the long run, in, in making all of the me- members of the investment team...... appreciate as they r- the way they will appreciate next time, they will hopefully not make that same logical error again, is by remembering t- the pain of the prior time, right?

    9. HSHarry Stebbings24:36

       Are you worried that you will prevent people from speaking? If you are a young member of the team, you may be-

    10. KSKyle Samani24:42

        Yes.

    11. HSHarry Stebbings24:42

        ... fearful to speak because of the tone and put-down that you've seen others be put down to.

    12. KSKyle Samani24:49

        It's never put-down. It, like, it's never p- Like, I never get off a investment committee and, like, grab a beer with people. Um, that's not a problem at all. But yeah, like, you have to have the fortitude to get through it, and like, if you don't have the fortitude, then

11. 25:01 – 25:44

    How do you hire at Multicoin?

    1. KSKyle Samani25:01

       you're not gonna survive in multicoin.

    2. HSHarry Stebbings25:03

       Has it always been this way?

    3. KSKyle Samani25:03

       That's also reflected in our... Yes, and, and this is also a reflection of our, uh, our hiring process. Step one of our hiring process is write an essay better than what's on our blog.

    4. HSHarry Stebbings25:14

       (laughs)

    5. KSKyle Samani25:14

       I actually, I don't read your name, I don't read your background, I don't read your resume, I don't care. I just start reading the first words of your, of your document. Um, and I won't rip it apart, uh, you know, to them, but I'll have a conversation and we'll verbally go through it. Um-

    6. HSHarry Stebbings25:30

       What's step, what's step two of the hiring process? I love that as step one.

    7. KSKyle Samani25:35

       Uh, step two is do that with everyone on the investment team. (laughs)

    8. HSHarry Stebbings25:41

       (laughs)

    9. KSKyle Samani25:41

       Uh, separately. Uh, basically that's

12. 25:44 – 27:15

    Is crypto collaborative?

    1. KSKyle Samani25:44

       it.

    2. HSHarry Stebbings25:44

       Can I, can I ask how, w- what, when we, if we go back to the, the token buy-in. When I, again, when I spoke to Avital, he said, "The joy of, you know, being a crypto investor in many ways is the collaborative nature, and it's much more collaborative than traditional venture." Do you agree that crypto's more collaborative than traditional venture? And I, I didn't understand it because he was always saying, you know, "We don't need the ownership stakes that other people have. In venture, we can split and have 5% each, 5%, 5%, 5%" and I didn't understand how that actually works given fund sizes being a billion plus. How do you make venture returns in a collaborative ecosystem like I just mentioned?

    3. KSKyle Samani26:23

       Um, well, I mean, mathematically, the only way for that to be true is the outcomes have to be twice as large on average, right? (laughs) Um-

    4. HSHarry Stebbings26:30

       Yeah.

    5. KSKyle Samani26:31

       Uh, which, I don't know, is like decentralized ownership of stuff f- justified, valuation increased by 2X, 0X, 1X, 8X? I don't know. (laughs) That, that is a very, uh, good and open question and I do not have clarity on the answer to that. Um, I generally think it is, uh, it was a lot more collaborative. It is a lot less collaborative now as the fund sizes have gotten larger. Um, everyone's got sharp elbows these days.

    6. HSHarry Stebbings26:59

       Do you find that?

    7. KSKyle Samani27:01

       Yes.

    8. HSHarry Stebbings27:05

       (laughs) I mean, I have natural questions but I'm not gonna get answers to them. Uh-

    9. KSKyle Samani27:10

       (laughs)

    10. HSHarry Stebbings27:10

        (laughs) No, i- i- i- I, I, I totally, uh... Can I, on, on your side,

13. 27:15 – 29:37

    Portfolio construction in crypto

    1. HSHarry Stebbings27:15

       like, again, I'm asking from naivety perspective, but in venture, we have portfolios, we have portfolio construction. You have a number of diversification, like, lines that you wanna hit. You have capital concentration limits on a per company basis. Do you have the same structures internally within multicoin of capital concentration, number of companies in a portfolio, reserves allocation? Does it look very different?

    2. KSKyle Samani27:40

       Uh, we have basically no formal rules of any form, uh, of, of portfolio construction nature. Um, we don't do any notion of reserves in multicoin. Um, we just deploy it and raise our next fund. Um, uh, and then, in terms of, you know, practicalities, um, we've talked a lot about, you know, like, 20% DeFi, 40% NFTs, 30% other, new, like, you can come up with various diversification buckets if you want. You know, you could say we're gonna do t- X percentage in the Solana ecosystem, Y percentage in the Arweave ecosystem. I've seen a lot of pitch decks that, that do that kind of a thing. Um, I think it's extremely value destructive, um, to do so, um, because-

    3. HSHarry Stebbings28:37

       Why?

    4. KSKyle Samani28:38

       ... you can't know ahead of time what you, y- Like, we could not forecast Helium. It would not f- If we had any constraints on what is in strike zone or not, then Helium would've been out of strike zone. Um, so, uh, and we've done a, a handful of things more recently that, again, like, just they, they would not fit in existing bucket o- of any form. Um, so I, I, I have very strong aversions to sector-centric portfolio, um, construction. You do see, obviously, stage-centric stuff. Um, we are stage agnostic. We will write $1 million tickets, we will write $300 million tickets, and we will do everything in between. Um, that's obviously not very common, um, but like we, we do it and we have no formal constraints in our, our LPA on, on that.

    5. HSHarry Stebbings29:35

       When you spoke about the memos

14. 29:37 – 31:08

    How much do founders matter?

    1. HSHarry Stebbings29:37

       and tearing them apart, I, I was interested because, you know, fundamentally, when I look at pre-seed and seed state, I have a very clear opinion that markets change, products change, and really, the only thing that will stay the same, hopefully, for the first 24 to 36 months is the founders, and they will guide everything within the business. And so, the only thing that matters is the founders. Uh, literally the only thing that matters. Um, I've backed many founders who I think have terrible ideas and I hate their companies, but they're brilliant people and I believe 100% in them. My question to you, is it so founder centric and how do you think about the importance of market and product in what is a very different world?

    2. KSKyle Samani30:17

       Um, yeah, multicoin s- prioritizes all, I'd say 93% of our discussion time is on market. Um-... uh, I will have, like, glanced at a couple of screenshots of the product, but I don't- don't really care. Um, and founders, I only care that the founder market fit is, like, makes sense, and they have the, you know... If they're doing something extremely technical, like, they need to have obviously the relevant technical background or whatever it is.

    3. HSHarry Stebbings30:43

       Cool.

    4. KSKyle Samani30:44

       Um, but only just care that the founder market fit makes- makes sense. Um, our- our- our belief is that you can reason about at-market evolution with a lot more precision than I'd say probably most other VCs believe, um, and that's what has given us the abil- the conviction to, uh, make high- high concentration investments in things that other people, that to the extent they were to do them, would have done it at 1/10th

15. 31:08 – 33:33

    How do you predict markets?

    1. KSKyle Samani31:08

       the size that we did. Um-

    2. HSHarry Stebbings31:10

       So, how do you pre- how do you think you predict markets and analyze markets in a way that's superior to other people, bluntly? And- and also, you know, there- there are just so many fucking black swan events today (laughs) , from your COVIDs of your world to your, you know, wars, uh, that are just so unpredictable. Um, how- wha- how does it work? (laughs)

    3. KSKyle Samani31:32

       Yeah, so most markets you struggle with, and you cannot develop that conviction. It- it's ju- it's very difficult. But there are some markets where you can. Um, and the thing we really spend our energy on is, like, a cup- couple of things. One is, okay, let's assume this thing is starting to be successful. Um, where- where are the returns to scale? Um, I think most folks at the earliest stages of investments are- are- are not nearly rigorous enough in discussing where the returns to scale come from. Um, they-

    4. HSHarry Stebbings32:01

       When you say re- returns- returns to scale is outcome scenario planning? What do you mean by returns to scale?

    5. KSKyle Samani32:06

       No, there needs to be something str- fundamental to the nature of the- the product and the market that the product is... E- every marginal dollar of revenue or usage is getting easier than the previous dollar of revenue or usage.

    6. HSHarry Stebbings32:18

       Okay.

    7. KSKyle Samani32:19

       Um, so, like, the- the most common way this is discussed is network effects. There- there are other forms of returns to scale beyond network effects. Um, network effects are generally misunderstood. Um, we talk about network effects as either sub- sublinear, linear, or superlinear. Um, and, uh, or usually the sublinear one is logarithmic, almost always. Um, and being very clear about that, being very clear about, uh, once- once the- the new insight is understood in the world, h- what are the ways in which there are ways to respond, both by new startups and by incumbents? Um, an- and again, being fairly rigorous in that analysis. Um, and then the other thing we focus on in addition to the returns to scale once you- you've ach- you've started the breakout is, you know, what's the core wedge, right, to get to the breakout point? Um, and, uh, again, we- we just, like, debate, I mean, again, to painful levels of detail, uh, what are all of the assumptions in the product and- and the market? What are the consumer psychology? How- how are people thinking about this? Um, and do we actually believe that you can establish that wedge and get- get some sort of flywheel going?

    8. HSHarry Stebbings33:27

       I- I have to ask, what... You mentioned the three different types of network effect there. I did not understand

16. 33:33 – 35:32

    The three different types of network effects

    1. HSHarry Stebbings33:33

       one of them, so can you just help me understand? (laughs) What were, what are the three different types and what, how are they different?

    2. KSKyle Samani33:38

       Well, so I, I mean, there's- there's lots of kinds of network effects. Um, I actually think the most important is inclusionary versus exclusionary, um, but that- that's a separate from what I refer- referenced earlier, which is just either are the network effects superlinear, linear, or sublinear? Meaning, like, as- as you add each additional user to Facebook or each additional user to the Helium network or whatever, um, what is the shape of that curve, right? Um, where the X axis number of users and Y axis is, like, value of network or something like that. Um, almost all network effects are sublinear. Um, almost all. Um, but also, like, to understand h- the degree of- of the curve, that logarithmic curve, you can reason about with a lot more precision than most people bother to try. Um, and then in the event whether you think there are superlinear network effects, or at least superlinear for the first part of the curve, that can also change how you think about conviction and sizing.

    3. HSHarry Stebbings34:37

       Can you take-

    4. KSKyle Samani34:37

       Um, we spend a lot of our energy debating what we think the shape of that curve is, and the more s- closer we are to superlinear, the more convicted we'll get to size up.

    5. HSHarry Stebbings34:45

       Can you take me on to a time when you were reviewing a deal and you said no because of the network effect work that you did in understanding it, and you were wrong, and wh- how did that change your mindset?

    6. KSKyle Samani34:59

       Uh, we basically don't do SaaS businesses for this reason, not like... And I say this as someone who used to be very enthralled by- by SaaS. Um, but very few SaaS businesses have meaningful network effects. There's obviously some brand effects. There are some SaaS businesses that have a network across the- the series of customers, comfort the tools, stay for the network kind of a thing. That- that to me is a lot more interesting. But as a general class of- of thing, SaaS, I- I'm... All of the various SaaS tool things for crypto companies, um, we, you know, I don't think we've ever done any of those for that reason.

17. 35:32 – 36:18

    Do you have FOMO?

    1. HSHarry Stebbings35:32

       And you regret it?

    2. KSKyle Samani35:33

       No.

    3. HSHarry Stebbings35:35

       Do you ha- do you get FOMO, Kyle?

    4. KSKyle Samani35:37

       Yes, I have... I live in a constant state of FOMO.

    5. HSHarry Stebbings35:40

       (laughs) Do you try and manage it or do you just welcoming embrace it?

    6. KSKyle Samani35:44

       Let's go. I love it.

    7. HSHarry Stebbings35:47

       (laughs) Kyle, what's the hardest thing about what you do?

    8. KSKyle Samani35:50

       Oh, I think- think different things are challenging f- for different people given genetics, biases, skills, whatever. Um, I think for most normal people, if they looked at my schedule, they, and they would just say, um, my- my sheer pace of information consumption and redistribution, um, I do not know anyone who consumes

18. 36:18 – 38:34

    How do you allocate time?

    1. KSKyle Samani36:18

       information at a higher rate than I do. Um-

    2. HSHarry Stebbings36:20

       Okay, talk to me about that. How do you choose the information that you choose to digest? In a world of so much information, how do you discover and how do you curate?

    3. KSKyle Samani36:28

       Um, so I actually believe that information consumption is extremely ineffective.... uh, excuse me, inefficient but out- extremely effective. Um, and I, I, I, like, fundamentally, look, you can hopefully, you curate for the best information and, like, it's more insightful and whatever, and leads you to some new insight or some new deal. But also, like, you just never fucking know, um, what you're gonna, what you're gonna read and where it's gonna come from. Um, and I think that, like, if you can genuinely consume 3X the amount of information as your competitors, um, that gives you a real leg up in rendering judgment over time. Um, where does my information come from? I mean, Twitter is a big part of it. I subscribe to probably 40 email newsletters per day, um, that I read across a range of crypto and non-crypto subjects. Um, obviously, I read, like, Tech Meme for my general news, to understand what's going on.

    4. HSHarry Stebbings37:24

       Do you allocate, do you allocate reading time? 'Cause I would love to read a lot more, but, like, you and I both know you get fucking 800 emails a day, and guess what? Your reading time goes to nothing.

    5. KSKyle Samani37:35

       Uh, I, I don't read books anymore. Um, but my daily reading time, although it is not on the calendar, is probably on the order of three to four hours.

    6. HSHarry Stebbings37:44

       And it doesn't get quashed by day-to-day stuff?

    7. KSKyle Samani37:48

       Um, I somehow manage in a way to do it. I mean, that oftentimes is I am laying in bed reading, uh, in the morning or at night. Um, I, I take phone calls on my Peloton, right? Like, so that I, I can get, save one phone call to have more reading time later. Um, I'm reading while I eat almost always. There's never a time I'm eating and not reading. Uh-

    8. HSHarry Stebbings38:13

       (laughs) Are you, are you married, Kyle?

    9. KSKyle Samani38:15

       I am single. (laughs)

    10. HSHarry Stebbings38:17

        (laughs) I was about to say, no wife would put up with that shit. (laughs)

    11. KSKyle Samani38:20

        No, no.

    12. HSHarry Stebbings38:21

        I, I, you know, I was listening to your partner, Tisha, on a, on a show the other day, and he said something really interesting. He said crypto bull markets were the result of token distribution innovations. And I thought of that, and I was like, "Really? Is that it

19. 38:34 – 40:10

    Why are there crypto bull markets?

    1. HSHarry Stebbings38:34

       or, or is it actually leverage, and leverage to the extent of 100X?" And I wasn't sure, so I'm not casting assertions here, but I'm like, to what extent is it, you know, token distribution innovations versus unparalleled leverage?

    2. KSKyle Samani38:49

       Uh, the amount of unit of leverage, amount of leverage per unit of equity has not meaningfully increased between cycles to the best of my knowledge. Um, perpetual contracts give you the leverage you want. Like, you're, you're good to go. Um, this three AC blowup is, like, bad, but like, again, there, the, the total cost of blowup here is two, three billion. Um, I don't know, against the total market cap of whatever, 800 billion, it's, it's still not, like, a huge number. So, um, yeah, not, not that bad in the grand scheme of things. Um, leverage of, comes into crypto markets in different ways, some of which is explicit, like perpetual contracts, some of which is hidden, for example, of the CeFi lending, and some of which is harder to identify. For example, ETH being used to fund ICOs, and then ICO teams holding the ETH in their treasuries. Um, and there are other forms of what we call hidden leverage out there, and, and we do spend a fair bit of our energy trying to identify those, um, 'cause they're not, like, strictly quantitative. Um, but, uh, that, that's not what creates the bull markets. What's created the bull markets is, yeah, I think actually, um, or they should, they should say the last two bull markets, um, has been novel formations, novel breakthroughs in capital formation.

    3. HSHarry Stebbings40:09

       Do

20. 40:10 – 41:17

    Will it be harder to raise funding?

    1. HSHarry Stebbings40:10

       you worry that now, obviously, you're in a bad market, it's gonna be harder to raise funding? Like, do you think you'll see a retreat from institutional LPs away from crypto with the volatility of the asset class?

    2. KSKyle Samani40:22

       Maybe. I don't know. We raised right before, um, things turned south, so I guess we got lucky. Um, we are not worried about inability to raise a new fund, but we also haven't bothered to try.

    3. HSHarry Stebbings40:35

       (laughs) Can I ask, when you, when you look at multicoins today, what do you think you do fucking well and you're world-class at, and where do you look at it and go, "Ugh, I would really like to improve and change that?"

    4. KSKyle Samani40:49

       Uh, my, uh, uh, information consumption coupled with, like, extremely rigorous debate over the nature of markets. I think we are best in class at that. Um, in terms of where- areas we want to improve, um, I would like to figure out how we, to do what we do at a larger degree of scale. Um, I am of the view that it is not possible. Uh,

21. 41:17 – 42:25

    Why is it hard to scale?

    1. KSKyle Samani41:17

       however, I would like to be convinced, um, otherwise.

    2. HSHarry Stebbings41:20

       What do you mean it's not possible? 'Cause Avichal said on the show that token buying at scale is, is so hard. Um, why, why is it not possible?

    3. KSKyle Samani41:28

       Um, I mean, well, I mean, specifically, uh, um, I, I, I believe that the, the core unit of an investment firm is the investment team. And, uh, I am of the view that if an investment team is larger than 10, you are now net value destructive to the overall investment team process and culture.

    4. HSHarry Stebbings41:49

       Why? I don't disagree with you, but why?

    5. KSKyle Samani41:52

       Uh, people do not get enough discussion time. Um, and, like, assuming all of those people are, are in fact out scouting deals and hunting deals, and then you're coming back to IC, like, assuming they're all producing, whatever, X number of deals per week, well, like, IC would just now become six hours of the day. And, like, there's just, like, some, like, upper bound limit to, like, the amount of time you can spend as a team reviewing decisions versus time spent collecting the information to make them.

    6. HSHarry Stebbings42:22

       And that's what many firms are, six hours of ICs.

22. 42:25 – 44:13

    Do you feel pressure to bring deals to the table?

    1. HSHarry Stebbings42:25

       I, I, I'm totally with you. Do, do you think people feel the same pressure then to bring deals to the table? Obviously, we both know many VCs. They feel intense pressure to bring deals. Do you feel that pressure in, in your world? Is, uh, temporal diversification important? How do you think about speed of deployment?

    2. KSKyle Samani42:44

       Um, we don't care about speed of deployment. Um, our view is we do it if we love it, and, like, besides that, whatever. Um, a- th- the solution to almost all problems goes away when you just d- I do it if I love it. Um, yeah.

    3. HSHarry Stebbings43:03

       I, I, I, I agree with you. Have you ever not loved it, Carl? Everyone has troughs. Have you not loved it?

    4. KSKyle Samani43:08

       Oh, yeah. Yeah, we've done a bunch of stupid shit that I look back on and I'm like, "Ugh. Why did we do that?" We, we do a quarterly decision review, um, looking back on decisions from the prior year, um, both in our hedge fund and in our venture funds. Uh, and the primary purpose of that is really, uh, if, if things have gone wrong since then, like, could we have forecasted that, right? Like, was there something we missed in our analysis, um, some form of risk we did not identify that was, was plausible to identify at that point in time? Um, and then the other thing we a- we really, really focus on in those decisions is, um, you know, if we did something, did we size it correctly? And I, I think, I think VCs don't spend nearly enough energy on this. Um, it's, it's always easy to undersize. Um, and, you know, did we-

    5. HSHarry Stebbings44:01

       What do you, what do you-

    6. KSKyle Samani44:01

       ... or were we too cautious?

    7. HSHarry Stebbings44:01

       Sorry, what do you, what do you mean, "Did you size it correctly" and it's always easy to undersize? Are you talking about the actual cash injection and size of your position?

    8. KSKyle Samani44:08

       Yeah, correct. It's always easy to say, "Ah, it's, it's risky. I want to do 10 million, now we're gonna

23. 44:13 – 45:35

    What do you learn from your winners and losers?

    1. KSKyle Samani44:13

       do five. It's risky," whatever. Um, yeah.

    2. HSHarry Stebbings44:15

       But you always wish you had more in your winners and less in your losers. Like-

    3. KSKyle Samani44:19

       Cor- cor-

    4. HSHarry Stebbings44:19

       ... so, like, what do you actually learn from that sizing thought process?

    5. KSKyle Samani44:24

       Well, again, it's, okay, it's been 18 or 24 months. Uh, ha- have the nature of the network effects been what we thought they would be? Um, if they were what we thought they would be and it's working, then we should've sized up, 'cause that means our assessment of the nature of that network effect curve was accurate.

    6. HSHarry Stebbings44:42

       Got it.

    7. KSKyle Samani44:42

       Now, we have some confidence interval going into it ahead of time, but, like, that should give us more confidence in our ability to have a more narrow confidence interval around the next, um, the ne- next, uh, what's it called, network effect kind of curve we're, we're constructing.

    8. HSHarry Stebbings44:57

       When you got it wrong, how often were there knowable elements that caused it to not work versus unknowable, unpredictable elements?

    9. KSKyle Samani45:08

       If we look across, you know, call it 80 or so companies in our portfolio that are, are now old enough to, that you can have done this analysis and, and have had some time pass, uh, off the top of my head, of the ones that had something, you know, go meaningfully wrong, whi- which percentage were in the knowable versus unknowable camp? Probably half were in the knowable camp and half were in the

24. 45:35 – 47:12

    Are loss rates the same in crypto?

    1. KSKyle Samani45:35

       unknowable camp.

    2. HSHarry Stebbings45:37

       Is loss rates the same in your world?

    3. KSKyle Samani45:40

       No, they're much lower.

    4. HSHarry Stebbings45:42

       And why are they lower?

    5. KSKyle Samani45:44

       Time to liquidity.

    6. HSHarry Stebbings45:46

       Help me understand this.

    7. KSKyle Samani45:50

       I mean, there's a lot of things, like tokens launch, they trade at a price that's 2X, 4X, 8X, whatever you're, right, and, like, it's been 18 months since you made the investment. You've c- you're convicted, your thesis was wrong for whatever reason and you get to get out. It's very rare in non-crypto venture that you have a chance to get out at a, at a multiple of 2, 3, 4, 5, 6, 8X w- 18 to 24 months later while you generally think that you were wrong with, with some hindsight.

    8. HSHarry Stebbings46:21

       Sure. And you can do that in your world?

    9. KSKyle Samani46:24

       Yes.

    10. HSHarry Stebbings46:25

        Does it not signal negatively if you multi-coin are selling a big block? Does that not negatively signal and cause challenges?

    11. KSKyle Samani46:35

        Um, it does, and, like, we always talk with the founders and, and understand from their perspectives, like, "Hey, what's working? What's not working?" Like, they will know are we happy or unhappy with how it's progressing. And then if we are going to sell, like, we do it in a responsible way. So we're never... Like, we will TWAP over six months, you know. Like, we're not gonna get out in two weeks.

    12. HSHarry Stebbings46:55

        Yeah.

    13. KSKyle Samani46:55

        That, that, that's irresponsible. Um, but we can happily TWAP over, over six months. We have one position we've been TWAPing for a year.

    14. HSHarry Stebbings47:03

        Wow. Okay. Yeah. That is different. I get you. Uh, listen, Carl, I want to move into my favorite, which is a quick fire. So I say a short statement, you give

25. 47:12 – 47:29

    Last piece of content that blew your mind

    1. HSHarry Stebbings47:12

       me your immediate thoughts. Does that sound okay?

    2. KSKyle Samani47:14

       Let's go.

    3. HSHarry Stebbings47:15

       So reading-wise, so you said about your information ingestion. What was the last piece of content that blew your mind?

    4. KSKyle Samani47:22

       Eugene Wei, um, not Status as a Service, but, uh, The Path Dependency

26. 47:29 – 48:05

    Is Bitcoin a hedge against inflation?

    1. KSKyle Samani47:29

       of Social Graphs. I forget the name of the blog post, but that one.

    2. HSHarry Stebbings47:32

       Is Bitcoin a hedge against inflation?

    3. KSKyle Samani47:35

       No. Bitcoin is nonsense.

    4. HSHarry Stebbings47:38

       Why?

    5. KSKyle Samani47:39

       It, it does not... There are so many ways to... You can a- choose to have a productive asset or a non-productive asset. Um, and then there are many assets that are naturally good hedges against inflation, the obvious of which is, like, Walmart and Amazon. Um, people do not want to own unproductive assets. Um, they're just, it's just, there's no reason to own them, because they are not productive. Um, and there are plenty of ways to get inflation-resistant assets that

27. 48:05 – 50:05

    Why does Solana beat Ethereum?

    1. KSKyle Samani48:05

       are not gold, or in this case, digital gold.

    2. HSHarry Stebbings48:08

       Why does Solana beat Ethereum?

    3. KSKyle Samani48:12

       Uh, Ethereum does not have a scaling plan seven years later. It still does not have one today. I do not think they will have one in the next 12 months. Um, predictability around a scaling plan is by far the most important thing. It's not just you need to say, "We scale as of this current moment." It's that everyone else in the outside world needs to believe that you have a plan that will persist over a meaningful period of time and they need to believe that plan. Um, Ethereum has no such plan. They never have and I do not think they will.

    4. HSHarry Stebbings48:41

       Why?

    5. KSKyle Samani48:43

       Because they choose not to.They, they choose to focus on, uh, heterogeneity experiments, which are fine, but they create confusion. Um, and then they just choose to make ideological... They choose to build according to their ideology of what they want to build as opposed to what the market actually wants to use.

    6. HSHarry Stebbings49:05

       What makes a really great plan versus an average plan?

    7. KSKyle Samani49:10

       That's a good question. Uh, specificity. I like, I like specificity in plans.

    8. HSHarry Stebbings49:18

       So as granular and as deep as possible?

    9. KSKyle Samani49:21

       As possible given the nature of, of the form of risk and nature of the activity involved.

    10. HSHarry Stebbings49:26

        Does that really inspire confidence in the community? And what I mean by that is, like, if you are super specific and super granular, to the mass consumer public buying Solana, they're buying it on their, you know, whatever neobank they're buying it through, or Coinbase or whatever. They're not reading the p- plan. Does it really actually inspire confidence or is it just a...

    11. KSKyle Samani49:47

        The customer-

    12. HSHarry Stebbings49:48

        ... in, in ............................

    13. KSKyle Samani49:48

        ... of a blockchain is, is not retail. The customer of a blockchain is developers. Developers do care.

    14. HSHarry Stebbings49:58

        Fair. What piece of advice (laughs) do you often give but find hard to follow Kyle?

    15. KSKyle Samani50:04

        Make sure you

28. 50:05 – 50:41

    What do you wish you knew 5 years ago?

    1. KSKyle Samani50:05

       work out every day. (laughs)

    2. HSHarry Stebbings50:08

       (laughs) Uh, tell me, what do you know now that you wish you'd known at the start of your time with Multicoin?

    3. KSKyle Samani50:14

       There are a lot of things that I think are... will be stupid in three years but I think will be interesting in the next 12 months, and I need to be more open-minded about those things.

    4. HSHarry Stebbings50:23

       How do you try and keep an open mind? 'Cause I find it hard in venture, you know, you see something that doesn't work, "Ah, fuck, healthcare never works, I'm not doing that." And actually something could work in healthcare.

    5. KSKyle Samani50:35

       Yeah, it's, it's, it's tough, I mean, I, I try and be an optimist, um,

29. 50:41 – 51:15

    What would you like to change about the world of crypto?

    1. KSKyle Samani50:41

       but I, I, I don't know, I mean, yeah, that, that's a very difficult question. (laughs)

    2. HSHarry Stebbings50:44

       Penultimate one, what would you most like to change about the world of crypto?

    3. KSKyle Samani50:50

       Uh, I would like clarity around a set of, uh, regulatory requirements around capital formation that are pretty close to laissez-faire.

    4. HSHarry Stebbings51:04

       Are we close to that?

    5. KSKyle Samani51:06

       No.

    6. HSHarry Stebbings51:08

       What do we need to happen for that to occur?

    7. KSKyle Samani51:11

       Uh, an act of Congress or some change in the

30. 51:15 – 53:30

    Most recent publicly announced investment

    1. KSKyle Samani51:15

       rules from the SEC.

    2. HSHarry Stebbings51:17

       (laughs) Final one for you, Kyle, what's the most recent publicly announced investment and why did you get so excited?

    3. KSKyle Samani51:23

       I think our most recently publicly announced one is Delphia, I think it's on our blog. Um, Delphia is a data DAO which is really cool, um, so the idea, right, people talk about like, "Oh, Facebook and Google monetize your data," and, "Oh, you should, like, be able to be compensated for that." I kind of think that's stupid, y- y- the compensation Facebook can give you is the utility of their respective services and it turns out people like those services. Um, but there is value in data, and in particular there is value in aggregating data, and there is some subset of people out there, not everyone but, like, 0.1% of the population or maybe 0.3% of the population that is particularly intrigued by the idea of monetizing their data, um, i- in a much more interesting way. And so the idea of Delphia is, "Hey take, uh, go to your Amazon account, go to your, uh, Google search history, go to whatever, LinkedIn, export your data, um, and then upload it to Delphia and Delphia will use that information to trade, um, US equities." And so obviously the, the m- hope here is that, like, you can forecast earnings of companies with much more precision by aggregating a bunch of consumer purchasing data that was not otherwise previously possible. I mean, part- in particular you can look at influencers, you can have a sense of identity across various channels that is not possible with credit card data, and then you can use a lot of short dated, uh, short dated call options ru- run over market makers and produce exceptional returns. Um, that's a theory at Scale, um, and so our hope is this is kind of like the ultimate manifestation of, like, Robin Hood, right, like, um, where you can, you can contribute to, to the new, the new thing.

    4. HSHarry Stebbings53:03

       Kyle, I have to admit, I, I, I've never felt quite so naive. Um, (laughs) you got to remember I normally interview VCs and I know VC. Uh, this has been an education and a joy. Thank you so much for joining me-

    5. KSKyle Samani53:15

       It's been a blast.

    6. HSHarry Stebbings53:15

       ... and for putting up with my incredibly basic questions.

    7. KSKyle Samani53:18

       I don't think they were basic at all, I thought these were great. Uh, token network effects, um, bootstrapping networks, this is awesome. So, Harry, thank you for having me on the show.

Episode duration: 53:30